BOISE — Idaho’s state tax revenues in May not only beat forecasts by more than $580 million — they marked the biggest revenue month ever for the state.
That means Idaho’s economy is officially booming as the state emerges from the pandemic. The state’s projected year-end surplus when the fiscal year ends June 30 is now nearly $810 million, which would set a new record.
“Years of fiscal conservatism, swift action during the pandemic, few COVID restrictions, responsible allocation of federal relief dollars, and our relentless focus on cutting red tape are the reasons Idaho’s economy is catapulting ahead of other states right now,” Gov. Brad Little said Wednesday in a news release.
Little also announced that with the rosy revenue numbers, he’s planning to call for additional tax cuts next year — on top of this year’s enactment of the largest tax cut in state history, in the form of permanent income tax rate reductions plus a one-time rebate — and additional education investments.
Little’s budget director, Alex Adams, sent out a memo to all state agency directors on preparation of their budget requests for next year, in which agencies were directed to include:
• 4% merit raises for state employees, which, if approved by next year’s Legislature, would be the largest pay boost for them since 2008. In the last 13 years, state employees got zero raises four times, in fiscal years 2010, 2011, 2012 and 2014. Idaho state workers get no cost-of-living pay increases, just merit-based increases.
• “Significant” education investments in the next fiscal year. Those will be determined between now and when the governor proposes his next budget to the Legislature in January, and will be “the top priority for general funds next session.”
• A 3.1% maximum increase in state general funds for all agencies except for K-12 public schools, for which the governor didn’t set a cap. “The governor is committed to ensuring a structurally balanced budget in which ongoing expenses do not exceed ongoing revenues,” the memo said.
• Specific requests for spending any American Rescue Plan Act federal coronavirus aid funds.
Idaho’s state general fund tax revenues have exceeded forecasts every month of this fiscal year except April, when they fell short by 23.7% or $179.6 million. April usually is the biggest revenue month of the year because that’s when Idahoans file their state income tax returns, but this year, that deadline was pushed back to May to match the delayed federal tax filing deadline.
May’s revenues more than made up for the April shortfall. “The usual spike in April receipts occurred in May this year,” wrote state economist Greg Piepmeyer in his monthly General Fund Revenue Report.
In May, individual income tax revenues were $637.1 million, $538.2 million over the forecast. Corporate income taxes for the month were $5.3 million ahead of forecasts; sales taxes were $35.8 million ahead of forecasts. For the fiscal year to date, individual income taxes are running 24.5% ahead of forecasts, and total revenues are 17.3% over forecasts.
“It sure blew away our expectations,” Adams said. “Things are starting to normalize, and we’re starting to feel pretty darn optimistic about how things look.”